Final 4G Auction plans announced by Ofcom

Ofcom, the UK Telecom regulator, today (24 July 2012) released final details of the upcoming 4G auction of 2.6Ghz and 800Mhz spectrum in the UK. The details broadly match those proposed back in January.

Contradicting some reports made this morning, Ed Richard, Ofcom CEO, maintained that there were no delays in the original timetable. Operators must submit an application to take part in the auction by the end of 2012, and the auction itself is due to take place in the first part of 2013, with the sale being completed by March 2013.

Richards denied there was a delay, saying: ‘The spectrum isn’t available until June 2013, as it will not be cleared of existing users until then anyway. We also have to solve potential interference issues between the 2.6GHz band and the radar band it sits next to.’

One of the major changes is that Ofcom has set aside spectrum for a fourth contender in the auction, aside from the major operators – O2 Telefonica, Vodafone and Everything Everywhere. The move is a bid to ensure that there is enough competition to offer consumers the best choices, price and innovation in the UK.

There will also be caps on the amount of spectrum that can be held by any operator, a move that both Vodafone and O2 have been against. Richards explained that the caps were to ensure that one operator was not vastly more dominant than any other. The caps are set at 2x10Mhz in total and 2×27.5MHz for sub 1GHz spectrum.

One purchaser will also be obliged to offer 98% indoor coverage for the population – which suggests 99.5% of outdoor coverage. They will also have to ensure that the indoor coverage covers at least 95% of the population in each of England, Wales, Scotland and Northern Ireland – the deadline set for this is the end of 2017.

The purchaser will also have to offer a minimum Bit rate on a proper 4G network, rather than simply using femtocells for the indoor coverage.

The four networks will each have to offer coverage on their own spectrum, although Richards confirmed that there was an option for sharing infrastructure.

Another change to the proposals made in January is that Ofcom is not planning to reserve spectrum for low-power radio access networks – Richards said that the regulator was not convinced that any benefits outweighed the costs involved.

The result of this is that operators, perhaps including Virgin and BT, which may have looked at that spectrum will now be obliged to bid for the 2,6Ghz spectrum if they wish to provide a low-power radio offering.

Changes have also been made to the spectrum portfolios set aside for a fourth bidder, which now look like this:

Portfolio 800MHz 1800MHz 2.6GHz

1 2x15MHz

2 2x10MHz 2x10MHz

3 2x5MHz 2x15MHz

4 2x15MHz 2x20MHz

An added complication to the auction is that Everything Everywhere still has to get rid of 2x15MHz of its existing 1800MHz holding in order to adhere to the requirements for the merger of T-Mobile UK and Orange UK.

The portfolios listed above may change if Everything Everywhere sells its spectrum before the auction.

An Ofcom decision on the matter is due before the end of the year.

The UK’s 4G auction process has been drawn out by added complications including having to clear existing spectrum and also by what Richards has described as ‘the constant backdrop of the threat of litigation’ hanging over the process.